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ECB Terminal Seen Well Above 3%, While BoE's Ends Steady

STIR

ECB terminal hike pricing pushed well above 3% after a hawkish meeting outcome Thursday in which Pres Lagarde suggested that 50bp hikes - such as the one seen today - could be repeated at the next two meetings at least.

  • Terminal ECB pricing came into this afternoon's European central bank meetings at 2.83% mid-year, but hit 3.10% with a later peak (Sep). Around 100bp is cumulatively priced for the next two meetings, in line with Lagarde's guidance.
  • In contrast, BoE terminal pricing was fairly steady, though softened following what was seen to be a dovish vote split on a 50bp hike: Pricing for the Feb meeting dipped to 3.86% vs 3.91% pre-MPC, roughly a 43bp hike implied.
  • Terminal rates fell to 4.46% by Aug 2023 from 4.51% pre-MPC, though retraced that drop in tandem with upward ECB repricing.



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